the informal sector has a future mcgill - ihsp november 15-16, 2007 1 global strategies: improving...

The Informal Sector Has a Future

McGill - IHSP November 15-16, 2007

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Global Strategies: Improving the Labour Conditions of the Working Poor. Panel 3:

Vulnerable Workers

McGill - IHSP

Paul-Martel RoyUQAM

The Informal Sector Has a Future


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1. Introduction

2. Concepts and definition

3. The evolution of various segments of the economy

4. The evolution of the informal sector

5. Conclusion: the informal sector has a future

The Informal Sector Has a Future – 1


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The term “informal economy” is commonly used

but it is not easy to define and pinpoint

The expression itself was coined in the ILO’s Kenyan mission report in 1971

The notion of informality has greatly evolved since; the main criterion of the definition, for the labour market, going from business size to non-registration and then to lack of separate accounting

The merit of each criterion must be assessed. The non-registration criterion is the most commonly used

The Informal Sector Has a Future – 2.1


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Speaking of informal economy, is speaking about economic segmentation

The idea of segmentation has also greatly evolved during the last few decades, whether it is applied to countries in the north or to those in the south



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The north is divided into a primary sector and a secondary sector, (Piore)

and subdivided into an upper primary sector and a lower primary sector (Piore again)



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Several more distinctions were made in the south:

the agricultural and industrial sectors; (Lewis, Todaro)

and of course the formal and informal sectors

The formal sector is subdivided into the public and private sectors

There also exist a traditional category and an externally focused category (Perez Sainz)

The informal sector is subdivided into accessible and less accessible sectors (Fields)



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The relevance of all these concepts is to be assessed

As for us, we have led some studies in the Caribbean

Belonging to a particular sector does not seem to be, on a self-sustaining basis, a major factor in revenue determination

The Informal Sector Has a Future – 3


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That being the case, how are the various segments of the economy expected to evolve, like the informal economy ?

In order to answer this question, the following items must be examined, for different economies:

- their demographic development,- their urbanization trend, - the general trends, characteristic of all free market

economies

This can of course lead to very different predictions depending on the economy in question



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The informal economy will evolve as well

This change is expected in three directions:

a step toward formalization, which involves - tax credits- easing of employment contracts- social benefit plans - market access- relaxation of administrative constraints



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a step toward solidarity

which will benefit from

- better access to financing

- increased movement toward social economics



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lastly and perhaps most importantly,

a step like before

that is to say an explosion of activities,

which correspond to what is now called the informal economy



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Which one of these trends will be definitive ?

It’s hard to predict

The informal economy is at least guaranteed a future,

- in the sense that it’s evolving toward a structure that will bring a higher level of well-being to its participants



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- or in the sense ofmaintaining more or less its current

characteristics

The informal sectorwould then continue to be a major component if not the main component of several developing countries.

Even more reason to continue to work hard to better understand its dynamics,

in order to plan better targeted interventions.

It’s exactly what we are doing here !

the informal sector has a future mcgill - ihsp november 15-16, 2007 1 global strategies: improving...

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